3 Cannabis Stocks to Sell in August Before They Crash & Burn

In This Article:

The potential for marijuana legalization in the U.S. generated a lot of excitement in the cannabis industry. The rescheduling of the drug from a Schedule I controlled dangerous substance to a Schedule III drug was a big step forward. But despite promises from politicians, legalization is still no closer to happening.

Marijuana companies really don’t benefit from rescheduling. While it was always ludicrous to classify marijuana the same as heroin, simply recognizing cannabis has medicinal uses won’t convince banks to lend money to marijuana companies.

Legalization is no panacea either. The government will surely heavily regulate and tax cannabis companies. The example of Canada’s botched legalization efforts should convince investors that simply making marijuana legal won’t miraculously change the situation.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

While pot stocks may gain access to traditional forms of financing, if they are still running money-losing operations they will not be much better off. For that reason, the following three companies are cannabis stocks to sell regardless of whether we have legal weed or not.

Aurora Cannabis (ACB)

Closeup of mobile phone screen with logo lettering of cannabinoid company Aurora Cannabis (ACB, blurred marijuana leaf (focus on left part of letter R in center)
Closeup of mobile phone screen with logo lettering of cannabinoid company Aurora Cannabis (ACB, blurred marijuana leaf (focus on left part of letter R in center)

Source: Ralf Liebhold / Shutterstock.com

Leading medical marijuana producer Aurora Cannabis (NASDAQ:ACB) is the first cannabis stock to sell. Despite having been in business for a decade and having operations in Canada and throughout numerous markets in Europe, Aurora has not yet figured out how to make a profit.

The cannabis stock reported a fourth-quarter loss of $20.8 million Canadian, or $15.2 million. While that was certainly better than the $76.2 million Canadian loss last year, it came on missed revenue expectations. Aurora said it generated revenue of $67.4 million Canadian, up 5% year-over-year, but below expectations of $69.5 million Canadian.

It was also a result of Aurora refocusing its business on the medical marijuana market and away from the consumer market. Because medical marijuana carries higher margins, Aurora is making a concerted push toward profitability. That may be shortsighted in the long run.

The consumer market is far larger than the medical market and could impede any upside potential Aurora Cannabis has. As the pot stock has taken significant cost-cutting measures, it has likely reached its limit. That means Aurora’s business must carry it forward, making ACB stock one to sell.

SNDL (SNDL)

The Sundial Growers logo is on a phone screen with a light blue background in front of the sundial logo on a white background. SNDL stock
The Sundial Growers logo is on a phone screen with a light blue background in front of the sundial logo on a white background. SNDL stock

Source: Shutterstock

Formerly known as Sundial Growers, SNDL (NASDAQ:SNDL) is the second cannabis stock to sell. It is the largest private-sector liquor and cannabis retailer in Canada but mixing booze and weed has not proved profitable.